Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Facebook acquires Instagram

facebook.com

Post reply on HN
Print view View original

141–150 of 394 posts

Re: Facebook acquires Instagram

#141

Post by freehunter »

jtchang wrote: post #8

Congrats to Instagram! Can't say I am not bit disappointed though with all the startups getting gobbled up by much larger companies. What's next? Pinterest?

Not saying I'd like to see it happen, but Pintrest would fit in well with Google+, moreso than Facebook. Google+ really does the sharing+comments thing well.

It's hard to know where to root. Independent start-ups give great competition to the big players, but I know a lot of people go into an MVP with the goal of making a large exit. It's a great way to get funding for your next startup.

Re: Facebook acquires Instagram

#142

Post by cmer »

draggnar wrote: post #44
cmer wrote: post #17

According to Crunchbase and Techcrunch, they raised $40M just a month ago at a $500M valuation. Something doesn't add up here. A billion dollar deal like this had to take more than a couple of weeks to close... http://techcrunch.com/2012/03/08/no-filter-required-instagra...

Is it against some regulation to do negotiations concurrently?

No but why raise so much money at such a lousy valuation if you're 30 days away from a billion dollar exit?

Re: Facebook acquires Instagram

#143

Post by marcamillion »

hackerbob wrote: post #134
marcamillion wrote: post #96

Earlier quoted context omitted.

I think the mere fact that they just raised $50M @ $500M valuation is the reason that this price is so high. Those investors in that round had to at least double their money...if the price was indeed $1B, that's all they did. Just 2X. Although, the argument can be made that a 2X return in 1 - 2 months isn't bad...but then again, VC funds don't have a 2 month life, so over the long-term value (i.e. 10 years most-times…

I would like someone to sit me down, and explain the economics of why accept a buyout immediately after raising. And NOT the part of accepting $1 Billon. But why they closed a round with a buyout just around the corner.

For 2 main reasons that I can think of:

a) You don't know if the acquisition will actually happen. Therefore if it doesn't, you aren't left with nothing.

b) It gives you a stronger bargaining chip to increase the price of the acquisition because you literally have a strong alternative. Instagram could tell FB to screw off, they are already getting $50M.

Re: Facebook acquires Instagram

#144

Post by davidcuddeback »

marcamillion wrote: post #104
davidcuddeback wrote: post #27

Earlier quoted context omitted.

They can kill off a photo service that rivals their own. (I can't judge which one's better, because I use neither.) Edit: I know Zuck says they will continue to build Instragram. I'm skeptical.

Now that they own it, there is no good reason to kill it. The only possible reaction to killing Instagram is ill-will with potential and current FB users, and bad press. Not only would he be going against his word - while the internal metrics of the company are going strong - but he would be killing an asset and destroying shareholder value. Even Zuck isn't crazy enough to pay $1B for a growing company and just kill…

I don't think they would outright and blatantly kill it. I think there are lots of scenarios in which Instagram becomes irrelevant due to neglect or intentionally crippling it. Ultimately, Zuck wants to keep people within Facebook's walled garden.

Google's acquisition of YouTube was different, because it was an opportunity for Google to serve more ads. I just don't see a similar opportunity for Facebook in the Instagram acquisition.

Re: Facebook acquires Instagram

#145

Post by brlewis »

loceng wrote: post #117

It's for the users, to prevent a competitor from 'owning' them - Facebook could block the API, otherwise all of their competitors can still gain access to them. If Facebook does start to screw around with the API then they're destroying value to the consumer. It's really too bad Instagram sold so soon. I hope they took mostly money.

The API already only gives access to 612x612 images with limited metadata. All Facebook has to do is keep them from improving the API.

Re: Facebook acquires Instagram

#146

Post by ChuckMcM »

marcamillion wrote: post #96
Toddward wrote: post #26

Earlier quoted context omitted.

Quite a jump from the $500 million valuation they were shooting for last week[1]. [1] http://techcrunch.com/2012/03/08/no-filter-required-instagra...

I think the mere fact that they just raised $50M @ $500M valuation is the reason that this price is so high. Those investors in that round had to at least double their money...if the price was indeed $1B, that's all they did. Just 2X. Although, the argument can be made that a 2X return in 1 - 2 months isn't bad...but then again, VC funds don't have a 2 month life, so over the long-term value (i.e. 10 years most-times…

100% return in 3 months (it won't close to the end of the quarter) is an annualized 400% return. If you're a VC you took $50M out of a fund put back $100M, now you can make 2 bets at $50M when before you only had one. I don't see any way that this isn't a great deal for the VCs.

That being said, this wasn't part of the S-1 and Facebook really has to tell potential investors how this will affect the financials, so presumably there is a revised prospectus or perhaps S-1 in the works.

Re: Facebook acquires Instagram

#147

Post by jimmyvanhalen »

simondlr wrote: post #30
jsm386 wrote: post #9

According to WSJ price is $1B source: http://allthingsd.com/20120409/breaking-facebook-to-acquire-... Edit: Direct Source: http://newsroom.fb.com/Announcements/Facebook-to-Acquire-Ins... The total consideration for San Francisco-based Instagram is approximately $1 billion in a combination of cash and shares of Facebook. The transaction, which is subject to customary closing conditions, is expected to close later this…

I have no words. That is incredible.

congratulations guys!

Re: Facebook acquires Instagram

#148

Post by marcamillion »

redthrowaway wrote: post #67
jonursenbach wrote: post #39

Earlier quoted context omitted.

Wonder if there was a bidding war between FB and Google that caused it to double off of that.

I think something like that had to have happened for the valuation to get so high. Apple may have been in the hunt as well, given their propensity for acquiring popular iOS apps and rolling the functionality into vanilla iOS.

The valuation wasn't all that high. It was just twice that of the last round. In order for the investors that just came in to get any sufficient return on their investment, they had to at least double their money. Ignore, for a second, that it was just 1 month (or 1 night as Techcrunch suggests) - it doesn't matter.

The purchase price is usually determined based on the latest round of financing.

Re: Facebook acquires Instagram

#149

Post by jimmyvanhalen »

larrys wrote: post #121
homosaur wrote: post #86

Earlier quoted context omitted.

YouTube is a content paradise though. There's tons of value there and you can sell ads against it or even charge for premium services. Where's the money in Instagram? The content is practically worthless and their only real value is in their userbase. Even though I use the Instagram client, most of the time I see photos, they come through Twitter. So that also reinforces for me that any value is in the users and not…

"Where's the money in Instagram?" Preventing Instagram from developing into something that has a negative effect on Facebook. It's a "keep your enemies closer" move.

and keeping Instagram away from Google. it's a good move.

Re: Facebook acquires Instagram

#150

Post by MaysonL »

marcamillion wrote: post #130
nirvana wrote: post #118

Earlier quoted context omitted.

The acquisition was in stock and cash. So the VCs that put up the $50M may have just gotten $100M in pre-IPO Facebook stock, which may well dramatically increase their return post IPO.

Ahhh....good point. That does change the formula a bit, but even still...what's the likely 1 year return on pre-IPO FB stock? 3X if so much? I doubt it. Anyway, it's better than 2X, so I guess they can't be pissed.

But, quite possibly, it could be .5X, or .25X... Current FB valuation is somewhere around 25X revenue ...
Post reply on HN